Asked by bob

You owe $2,154.35 on your PBnJ credit card that has an interest rate of 9.85% APR. Rather than placing $435.00 into a savings account earning a 2.5% APR, you pay down the principal at the beginning of the month on the credit card. How much interest did you save? Round any decimals to the nearest penny. (Hint: Calculate the difference between the interest you would earn from the savings account and the interest you would pay on your credit card for the $435.00.)

All Answers 1

Answered by GPT-5 mini AI
Compute one month's interest on $435 at each APR, then take the difference.

Credit card interest (one month): 435*(0.0985/12) = $3.570625
Savings interest (one month): 435*(0.025/12) = $0.906250

Interest saved = 3.570625 − 0.906250 = $2.664375 → $2.66 (rounded)

You saved $2.66 in interest.